Monday 13th April: Weekly technical outlook and review

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EUR/USD:

Weekly timeframe perspective: The Euro was incredibly active last week. A considerable 400-pip move south was seen from just below a major weekly swap level coming in at 1.1096, consequently engulfing the prior week’s candle and forcing the Euro to close at 1.0598. In the event that we see further selling this week, its likely prices will once again cross swords with a major weekly demand area sitting at 1.0333-1.0502.

Daily timeframe perspective: Following Thursday’s strong close below the daily swap level 1.0716, follow-through selling was seen on Friday. This move saw price touch base with a daily demand area seen at 1.0461-1.0565, which, if you look back to the weekly chart and zoom down to the daily scale, you’ll notice that this area of demand was actually a reaction to the major weekly demand zone just mentioned above.

4hr timeframe perspective: From this angle, we can see that price recently drove through the first two layers of a 4hr stacked demand formation, and, as reported may happen in the previous analysis, saw a small reaction from the most extreme area at 1.0550-1.0573 (located within the aforementioned daily demand area). With all of the above taken into consideration, where do we see the Euro moving to this week? Well, let’s start off by talking about the current 4hr demand area. A rally from here could very well be seen today, since let’s not forget that price is also trading around the top-side of daily demand area (see above) at the moment. However, the most we’re expecting out of this move is a drive up to the fresh 4hr supply area at 1.0682-1.0663, or even the 1.0700 handle positioned just above it. The reasons for why is simply because the overall downtrend is still very strong, and as we can see from the weekly chart, price still has a little way to go before hitting weekly demand (see above), hence further selling may yet be in store. As such, waiting for lower timeframe confirmation at this 4hr demand area is strongly advised.

Assuming the above does take place, and a rally higher is seen, our main focus will then be directed towards shorting the fresh 4hr supply area just mentioned above. That being said though, we have no interest in placing a pending sell order here and hoping for the best, lower timeframe confirmation will be needed before we risk capital, since this area could very well see a fakeout above to 1.0700 before selling off.

And finally, what if price sees little follow-through from the current 4hr demand area and closes lower? A close below would, in effect, be our cue to begin watching for price to retest this area as supply, since the path south will then likely be clear down to at least the 4hr demand area at 1.0461-1.0510 (located deep within the aforementioned daily demand area).

GBP/USD:

Weekly timeframe perspective: Like the Euro, the GBP was also very active last week. A 280-pip move south was seen from just below a recently broken weekly Quasimodo support (now resistance) line coming in at 1.5007, consequently engulfing the prior week’s candle and forcing Cable to close at 1.4630. As per the weekly timeframe, we believe further selling may be in store this week for the following reasons:

The recent move on the pound has, as far as we can see, consumed most of the major buyers around the low 1.4634, thus potentially clearing the path down to at least the weekly demand area seen at 1.4225-1.4482.

This pair is still in a freakishly steep downtrend at the moment.

Daily timeframe perspective: The daily chart shows that price broke below daily demand at 1.4643-1.4823 last week. This move has likely opened the window to further downside towards daily demand at 1.4343-1.4465, which is located within the weekly demand area that we just talked about above.

4he timeframe perspective: The recent decline in value seen on the pound forced prices down into a round-number supportive structure coming in at 1.4600, which, as you can see, was defended into the close.

Given that both the weekly and daily timeframes are suggesting further selling may take place (see above), where does this leave us on the 4hr timeframe? Well, for anyone looking to buy the momentum off of 1.4600 today, the most we see price rallying to is the small 4hr decision-point supply area at 1.4723-1.4704, which not only coincides nicely the round-number 1.4700, but is also the position where we believe pro money made the decision to push below daily demand at 1.4643-1.4823 on Friday – so all in all, a pretty significant area.

We’re not confident enough to be buyers in this market, so today’s task is waiting – waiting to see if price can indeed reach this 4hr decision-point supply area. In the event that it does, we’re going to be looking to short heavily as we feel the move from here could be considerable. However, to deal with any possible fakeout above this area, corresponding lower timeframe confirmation will need to be seen before we commit capital to this idea.

Incidentally, if price does not reach this area, and simply closes below 1.4600, we’ll then shift our attention to watching for price to retest this number as resistance, since the runway south will then likely be free down to test 1.4500 – forty or so pips above the daily demand area mentioned above at 1.4343-1.4465.

AUD/USD:

Weekly timeframe perspective: Over the past two and a half months, the buyers and sellers have been seen battling for position around the top-side of a weekly demand area coming in at 0.7449-0.7678, which, as you can see, also boasts long-term trendline convergence from the low 0.4775. However, with the downtrend the Aussie is in at the moment, and the somewhat indifference being shown by the buyers here, the outlook for the AUD/USD pair is not exactly positive. Nonetheless, let’s not judge at this point without seeing what the lower timeframes have to say…

Daily timeframe perspective: From the daily timeframe, we can see that buying came into the market last week from daily demand at 0.7449-0.7598 (located deep within the aforementioned weekly demand area). The upward momentum, nevertheless, began crumbling not too long after as sellers appeared to be taking an interest around the 0.7720 mark. In the event that the buyers fight back this week, potential resistances to keep an eye on are the downtrend line extended from the high 0.8294, and the daily supply area seen above it at 0.8024-0.7883.

4hr timeframe perspective: The AUD/USD sold off during Friday’s sessions, which resulted in price taking out the lower low 0.7658, and crashing into a 4hr demand area seen at 0.7626-0.7649. For those of you who read our previous report on the Aussie, you may recall us mentioning that we had placed a pending buy order just above this 4hr demand area at 0.7652, which has now been filled.

Considering the state of the weekly demand area (see above) at the moment, our team decided to take partial profits at the 4hr supply area seen above at 0.7720-0.7696, and move the stop to breakeven. If price can overcome this 4hr resistance barrier today, two things are possible:

The opportunity for us to trail the remaining portion of our position up to 0.7762. The reason for targeting this level is simply because it converges beautifully with the daily trendline extended from the high 0.8294 that was mentioned above.

A chance for intraday buyers to enter long on any retest seen and also target 0.7762.

USD/JPY:

Weekly timeframe perspective: The USD/JPY ended the week positively as active buying came into the market from within a small weekly decision-point demand area at 118.22-119.40, consequently forcing the market to close at 120.16. All of this, coupled with the fact this pair’s trend is still firmly pointing north, we might, just might, see prices challenge the weekly Quasimodo resistance level seen at 122.18 sometime this week.

Daily timeframe perspective: The daily timeframe on the other hand, shows that price was pushed into a minor daily supply area seen at 121.18-120.08 early on last week. Should the buyers manage to get above this barrier, the runway north will then very likely be clear for prices to invade the aforementioned weekly Quasimodo resistance level. Let’s take a look to see what the 4hr timeframe offers…

4hr timeframe perspective: Following Thursday’s spike above 120.60, the market collectively sold off during Friday’s sessions, dragging prices down to a 4hr demand area positioned at 119.84-120.05. For those of you who read our previous report regarding this pair, you may recall that we placed a pending buy order just above this 4hr demand zone at 120.07, which, as you can see, was filled a few hours before the market closed. We have two targets in mind for this trade; the first comes in at 120.60, the second around 4hr supply at 121.18-120.92. Both of our targets are located within the aforementioned daily supply area.

If you did not read our previous analysis, at this point you may be thinking, why have they just bought into daily supply?! And you’re right, we have! However, along with buying into supply, we’ve also bought WITH the overall trend, and also with support from a weekly decision-point demand area (for levels see above), since in our experience the higher timeframes usually take precedence. If you missed this entry, all is not lost. There may be a chance for you to jump in on the lower timeframes if price confirms strength around this zone.

USD/CAD:

Weekly timeframe perspective: Although the view from the weekly timeframe shows the USD/CAD in a firm uptrend at the moment, the last three months or so has seen price struggling to get above the weekly Quasimodo resistance level coming in at 1.2765.

Daily timeframe perspective: From the daily picture, we can clearly see that this pair has chiseled out a consolidation zone between the daily demand area at 1.2350-1.2468, and a daily supply area seen at 1.2833-1.2742 (encapsulates the aforementioned weekly Quasimodo resistance level).

4hr timeframe perspective: Friday’s trading sessions saw price aggressively take out the 4hr supply area at 1.2654-1.2614, and sell off just as aggressively into the weekly close 1.2565. This spike above supply has very likely flushed out a ton of sellers from the market – thus potentially opening the gates for a move up to the 4hr Quasimodo resistance level seen marked in green at 1.2692. With this, we have possible direction in line with the current weekly trend, now we need a place to buy from. The only area that jumps out to us is 4hr demand at 1.2507-1.2542. To be clear here, we have absolutely no interest in placing a pending buy order at this zone because, for one, a fakeout below the area may be seen to 1.2500, and secondly, let’s not forget that resistive pressure is currently being seen on the weekly timeframe (see above). Therefore, we’d highly recommend waiting for the lower timeframes to confirm this area’s strength before committing your hard-earned capital. The ultimate target for this trade if a buy signal is seen is 1.2692, though, we may have targets before this depending on how price approaches the 4hr demand zone.

If price breaks below this area of 4hr demand (and the round number 1.2500), we’ll then begin watching for price to retest this number as resistance, and look to trade short with lower timeframe confirmation down to the 4hr Quasimodo support level at 1.2428 (located within the aforementioned daily demand area).

USD/CHF:

Weekly timeframe perspective: The USD/CHF pair ended the week positively as prices surged from a weekly swap level coming in at 0.9525, forcing the market to close at 0.9789. In the event that the buyers can maintain a strong position above this barrier, it’s likely that we’ll see a follow-through move north either up to parity, or failing that – the weekly supply seen just above it at 1.0239-1.0131.

Daily timeframe perspective: From this angle, we can see that price firmly closed above daily supply at 0.9755-0.9662 last week. On the condition that the buyers can hold out above this area of supply-turned demand, further buying could potentially be seen up to a daily supply area at 1.0090-1.0008 (located just a little above parity).

4hr timeframe perspective: Friday’s trading action shows that the rebound from the 4hr supply area at 0.9811-0.9767 was short-lived. Heavy buying came in from the 4hr swap area seen just below it (green) at 0.9755-0.9732, which, as you can see, forced price above the 4hr supply zone. This move likely stopped out a ton of traders attempting to fade this barrier, which as a result has possibly freed the path north up to another 4hr supply seen at 0.9870-0.9903.

Given that both the weekly and daily timeframes have relatively positive outlooks (see above) at the moment, and the 4hr timeframe shows there’s also potential for a move north (see above in bold), the focal point for today, and possibly into the week will be around the small 4hr demand area at 0.9750-0.9770. Our team has come to a general consensus that this area is good enough for a pending buy order to be placed here (0.9773). However, risk management has only permitted us with 50% of our usual position for this trade; the remaining 50% will only be utilized when, or indeed if we see corresponding lower timeframe confirmation. If a rebound is seen here, we intend to watch how price action behaves around the following targets: the round number 0.9800, Friday’s high 0.9835, and finally 0.9867, which is located just below the 4hr supply area mentioned above at 0.9870-0.9903, which is where we’ll likely close out the full position as per the green arrows.

DOW Jones 30 (US 30):

Weekly timeframe perspective: From the weekly timeframe, we can see that the DOW ended the week closing (18056) around the underside of a weekly resistance level coming in at 18098. This minor barrier has been holding the market lower now for around three months! This is quite a feat considering how incredibly strong the uptrend has been over the past six years!

Daily timeframe perspective: The daily timeframe shows that just above the weekly resistance level at 18098, there hangs a beautiful-looking daily supply zone coming in at 18207-18101. If price manages to reach this area this week, a reaction will no doubt be seen, how much of one though is anybody’s guess. However, eventually, we see this area being taken out and the runway cleared for the weekly trend to continue. Let’s take a look at what the 4hr timeframe has to say on the matter…

4hr timeframe perspective: From the 4hr timeframe, we can see that prices rallied during course of Friday’s sessions. This move took out 4hr supply at 18009-17939, and drove into a small 4hr decision-point supply area seen just above it at 18085-18054, which, as you can see, is positioned just below the aforementioned weekly resistance level.

In view of the higher-timeframe structure (see above), our team has no intention to begin buying here. However, should today see prices reverse from the current 4hr decision-point supply area, and push the market down to a 4hr decision-point demand area coming in at 17941-17984, this could be an interesting place to look for confirmed longs. There is one catch though! Price cannot hit the aforementioned weekly resistance level before reaching the 4hr decision-point demand area, since this will be our primary take-profit target as per the green arrows. Don’t forget here guys, even though we’re trading around weekly and daily resistive structures (see above), the overall trend is still incredibly strong, and we have faith this is not going to be ending anytime soon, hence looking to buy into higher-timeframe areas of resistance.

XAU/USD (Gold):

Weekly timeframe perspective: From the weekly timeframe, we can see that the overall trend is still firmly pointing south. In spite of this, last week’s action saw price break above a small weekly decision-point supply area at 1223.1-1202.6, which, in our opinion, has very likely flushed out a ton of buy stops, and potentially cleared the way north for further upside towards the weekly swap level coming in at 1251.0.

Daily timeframe perspective: From the daily timeframe, we can see that last week’s trading also saw price push above a daily supply area at 1223.1-1213.0 (located deep within the aforementioned weekly decision-point supply area). This move has potentially freed the pathway north up to daily supply at 1236.6-1227.7, which is now effectively a key obstacle to a move towards the aforementioned weekly decision-point supply area. We can also see that buying interest came in around the 1193.1 mark on Friday, where initially, we had our eyes on the level below – the daily swap barrier at 1182.0. It will be interesting to see what the 4hr timeframe makes of this…

4hr timeframe perspective: The latest coming in from the Gold market reveals that the small 4hr decision-point demand area at 1191.3-1194.1 held firm, and was clearly the technical reason why prices stopped where they did on the daily timeframe. Consequent to this, the price of Gold rallied up to a 4hr supply area coming in at 1212.2-1209.0, where the market closed for the week at 1207.7.

For anyone who read our previous report on Gold, you may recall us mentioning to keep an eye on the aforementioned 4hr decision-point demand area for potential buying opportunities. We do hope some of our readers managed to enter long around this 4hr zone, and also still have some of their position left in the market. The reason being is even though the overall trend on Gold is pointing south at the moment, we have seen both a weekly/daily and a 4hr supply (1223.1-1219.0 seen marked with a green arrow) zone engulfed/spiked, collectively suggesting the market may want to move higher in the short term.

Two take-profit targets have already been hit (1202.5 and 1208.2) from our long taken at 1194.7, set just above the aforementioned 4hr decision-point demand area. The third take-profit target comes in at 1218.5, with 1226.5 in mind as a final target (seen just below the 1236.6-1227.7 daily supply area). So, for anyone already long, well done! For those looking to get in on this move, we would recommend waiting for price to prove itself first by closing above 4hr supply at 1212.2-1209.0. This would potentially give one the chance to buy any confirmed retest seen of this demand as supply, and just as we’re already doing target both 1218.5 and 1226.5.

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